KUALA LUMPUR: Ailing steel maker Perwaja Holdings Bhd expects to restart its Kemaman plant operations within the next 18 months after securing its white knight China's TianJin Zhiyuan Investment Group Co Ltd, with an investment commitment of RM300 million. With that, Zhiyuan will emerge as a majority shareholder of Perwaja while seeing the dilution of Kinsteel Bhd's shareholding in Perwaja. Kinsteel owns a 31.25% stake in Perwaja currently. Zhiyuan will lead the Perwaja management team under the new business plan. The conglomerate has diversified businesses in minerals, chemicals, alloys, new materials, construction materials, real estate, logistics and international trading. According to Zhiyuan's chairman and president Zhang Zhong, Perwaja's rejuvenation plan will span over the next five years, but he declined to disclose how much more will be pumped into Perwaja after 18 months. Zhiyuan will inject at least RM100 million into Perwaja in the first phase, of which RM70 million will be used for the purchase of new machinery and the remaining RM30 million in the form of security deposit. In the second phase, Zhiyuan will then put in up to RM200 million to modify and upgrade the machinery at the Kemaman plant, with an estimated 400,000 tonnes of semi-finished stainless steel slabs produced annually. Perwaja had signed a preliminary lease agreement with Zhiyuan for leasing a portion of the land forming the Kemaman plant to Zhiyuan, whereby the land will be utilised by Zhiyuan to locate its plant and machinery to be imported from China. Under the revival plan, Perwaja will steer away from its traditional product lines into stainless steel segment, which is deemed less competitive within the region. Zhang said Zhiyuan will source off-grade quality materials from overseas markets, which could lower the cost of production for alloy metal and stainless steel in the future. "We're planning to build up our recycle business ecosystem to feed into our production system in order to enhance the competitiveness of our products," he added. Speaking to reporters after the signing ceremony here last Friday, Perwaja's director Datuk Alan Ong said the group aims for an annual production capacity of 800,000 tonnes of stainless steel and alloy metal after the Kemaman plant restarts its operations. Perwaja's director Tan Sri Pheng Yin Huah meanwhile said the company aims to be the biggest producer of stainless steel in Malaysia and even Southeast Asia by leveraging on Zhiyuan's know-how and capabilities in the steel industry. Pheng, who was the former managing director of Perwaja, is also the managing director of Kinsteel. Perwaja and Zhiyuan are expected to enter into a definitive agreement within the next three months upon completion of the due diligence. Perwaja has ceased operations since August 2013 following the gas and electricity supply curtailment by Petronas and Tenaga Nasional Bhd (TNB), with RM450 million still owed to Petronas Gas and TNB as well as RM200 million to the Ministry of Finance. To date, Perwaja sits on RM2.2 billion debts owing to the banks, statutory bodies and creditors. Ong is hoping the debt restructuring scheme can be finalised soon, to pave the way for the revival of its Kemaman plant. Perwaja has until July 31, 2015 to submit its restructuring plan to the authorities. Perwaja, a Practice Note 1 and 17 (PN 1 and PN 17) company since November 2013, has been loss making over the past few years. It reported a net loss of RM69.21 million for the second quarter ended December 31, 2014. The counter was down 1 sen to close at 20.5 sen last Friday.